Singapore has emerged as the top destination for overseas investment by Indian companies, with more than USD 10 billion parked there in April-December 2007- 08, up 13 percent from year-ago levels, says a Reserve Bank of India (RBI) report, reports PTI .

“Direction of investment indicates that 37 percent of the approvals for outward FDI (of USD 5 million and above) were towards Singapore, followed by the Netherlands (26 per-cent) and British Virgin Islands (8 percent),” the report said.

According to the RBI report, India’s overseas investment, which began initially with the acquisition of foreign companies in the information technology and related services sector, “has of late, spread to wider areas like manufacturing, financial and non-financial services.”

The rise in both the numbers and the amount of approved proposals, the RBI said, “Is reflective of large overseas acquisition deals by Indian corporate facilitated by progressive liberalisation of the external sector policies.” The RBI report further said equity investment accounted for almost 90 percent of the total outward investments, followed by loans and guarantees.

The outward FDI flow, which was USD 1.8 billion in 2004-05, increased to USD 4.9 billion the next year and more than doubled to USD 12.8 billion in 2006-07. The trend has continued in 2007-08, with outward FDI increasing to more than USD 10 billion during (April-December 2007) compared to about USD 9 billion in the corresponding period in the previous year.

In terms of approvals, the RBI report said during April- December 2007 proposals worth USD 18.43 billion were approved as compared to about USD 8 billion during the corresponding period in the previous fiscal. The overseas FDI approvals jumped from USD 2.8 billion in 2005-06 to more than USD 15 billion in 2006-07.

The number of proposals approved for joint-ventures and wholly-owned subsidiaries increased from 1,214 in 2003-04 to 1,817 in 2006-07. The RBI report further said during April-December 2007, as much as 99.6 percent of the proposals involving 97.7 per- cent of the total amount were approved by the authorised dealers, while the rest were approved by the RBI.

Quoting United Nations Conference on Trade and Development (UNCTAD) data, the RBI report said that overseas FDI from India has been valued at USD 9.7 billion (in 2006) as compared to USD 28.2 billion for Brazil, USD 16.1 billion for China and USD 18 billion for Russia. The value of Indian FDI stock, however, was higher than that of Singapore, South Africa and South Korea, it added.

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